What to collect from your suppliers

What a business can deduct depends on what it can substantiate, and what it can substantiate depends on what its suppliers give it. That makes documentation a commercial characteristic of a supplier, alongside price and reliability, and one that almost nobody evaluates when choosing one.

The cost is invisible until it is not

A supplier who cannot issue a compliant invoice is quietly more expensive than their price suggests, because the purchase cannot be claimed. Across a year, across a supplier the business buys from weekly, that difference is real money. It does not appear anywhere in the business until the position is computed.

The method

Take the ten suppliers the business spends most with. For each, note whether a proper tax invoice is received, whether it is kept somewhere retrievable, and whether one from six months ago could actually be produced. Most businesses doing this for the first time find the same pattern: the large formal suppliers are fine, and the gap is concentrated in the mid-sized ones they buy from constantly and have never thought of as a documentation risk.

What to do about a supplier who cannot

There are three honest options and the right one depends on the amounts. Ask them, since many smaller suppliers simply have not been asked and can issue a proper document on request. Price the gap in, treating the unclaimable cost as part of what they charge. Or move the spend, if the amounts justify it. What does not work is assuming it will resolve itself, because the business bearing the cost is yours and the supplier has no reason to notice.

Landed cost, not invoice price

While the supplier list is open, it is worth recording what each line actually costs: the buying price plus transport plus what is lost or damaged getting it onto the shelf. Margin computed against the invoice price alone flatters every line in the shop, and for imported goods the gap between invoice price and landed cost is large enough to turn an apparently profitable line into a loss-making one.

This is one job, not two

Supplier documentation and stock costing are usually treated as separate concerns, one for the accountant and one for the shop floor. They are the same record looked at from two ends: what was bought, from whom, for how much, and what happened to it. A business that keeps that record currently has answered both questions without doing either job twice.